Google spared $1.3 bn tax bill with victory in French Court

Google won its fight against a 1.12 billion-euro ($1.3 billion) French tax bill after a court rejected claims the search-engine giant abused loopholes to avoid paying its fair share.

Google didn’t illegally dodge French taxes by routing sales in the country out of Ireland, the Paris administrative court decided Wednesday. (Reuters)

Google won its fight against a 1.12 billion-euro ($1.3 billion) French tax bill after a court rejected claims the search-engine giant abused loopholes to avoid paying its fair share. Google didn’t illegally dodge French taxes by routing sales in the country out of Ireland, the Paris administrative court decided Wednesday. Judges ruled that Google’s European headquarters in Ireland can’t be taxed as if it also has a permanent base in France, as requested by the nation’s administration. “ Google Ireland Ltd. isn’t taxable in France over the period 2005-2010,” the court said in a statement. French tax administrators didn’t immediately respond to requests for comment.

In a parallel criminal case, French prosecutors raided the Alphabet Inc. unit’s Paris office in May 2016 after months of preparation spent offline to prevent leaks. That ongoing probe seeks to verify whether Google’s Irish unit has a permanent establishment in France and whether the firm failed to declare part of its income in the country.

“The French Administrative Court of Paris has confirmed Google abides by French tax law and international standards,” Google said in a statement. “We remain committed to France and the growth of its digital economy.”

The win for Google comes as France’s newly elected President Emmanuel Macron vowed to make the country “a startup nation” and pledged in June to create a 10 billion-euro fund to help finance innovation. Weeks later, French billionaire entrepreneur Xavier Niel unveiled a gleaming startup incubator in Paris to host his ambition to put the city on par with Silicon Valley for technology investment and to produce the next Facebook.

Authorities across the continent have been trying to claim a slice of the billions of dollars of profits Google’s owners kept out of their grasp using techniques known as the Double Irish and the Dutch Sandwich. To end a dispute spanning 14 years, it recently struck a 306 million-euro settlement with Italian tax authorities.

Paris judges ruled that the conditions to tax Google Ireland as if it had a permanent establishment in France weren’t met as Google France didn’t have the sufficient autonomy from the Irish headquarters. The court said this was evidenced by the fact that Google France’s employees couldn’t accept online advertising requests from local clients, with all orders needing approval from the headquarters in Ireland.

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Ahead of the ruling, Google got a boost last month when an adviser at the Paris administrative court delivered a non-binding opinion that the company should be let off the hook in part because of weaknesses in the legislation.